A group of lenders led by the Royal Bank of Canada is selling a leveraged loan of as much as $2.75 billion supporting Blackstone Inc.’s deal for an Emerson Electric Co. unit, according to people familiar with the matter.
(Bloomberg) — A group of lenders led by the Royal Bank of Canada is selling a leveraged loan of as much as $2.75 billion supporting Blackstone Inc.’s deal for an Emerson Electric Co. unit, according to people familiar with the matter.
The new loan is part of a $5.5 billion debt package being brought to public markets that would replace both a $2.9 billion loan held by banks as well as $2.6 billion of commitments Blackstone received from private lenders last year for its leveraged buyout. The acquisition is expected to close by the end of June.
The seven-year loan is initially being marketed at 350 basis points over the Secured Overnight Financing Rate, at a discounted price of 99 cents on the dollar, the people said.
Representatives for Blackstone, Emerson and RBC declined to comment.
Banks held an investor call at 10 a.m. Tuesday in New York for the term loan, said the people, who asked not to be named discussing a private transaction. The financing will include additional secured debt, the people added.
Credit markets have rebounded as worries surrounding last month’s bank collapses recede. Average prices for leveraged loans have climbed to around 93.7 cents on the dollar from lows of around 92.56 cents last month.
Banks led by JPMorgan Chase & Co. have been seeing strong demand from investors, which recently spurred them to tighten pricing and boost the size of a leveraged loan supporting Qualtrics International Inc.’s buyout.
Still, the new debt package for Emerson’s unit — which is expected to include a bond component that’s yet to come to the market — is the latest blow for private credit firms. Last year, Sixth Street Partners and Goldman Sachs Group Inc.’s private-lending division led the $2.6 billion term loan for Blackstone.
Now, direct lenders are starting to lose lucrative financing deals they snagged last year when credit markets froze. They are still grappling with the fallout of the Cotiviti Inc. deal after Veritas Capital and Carlyle Group Inc. ended talks earlier this month. Several direct lenders had lined up to be part of a $5.5 billion loan backing Carlyle purchase of a stake in Cotiviti, which would have been the largest private credit deal on record.
–With assistance from Lisa Lee and Jill R. Shah.
(Updates to reflect latest status on comment requests in fourth paragraph.)
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.